1 eFX Daily colour

1.1 FX Spot

1.1.1 Overview

(Feb-21) Yesterday, the USD/ZAR broke below our 18.40 target and hovered around 18.36 after hours. The Rand continues to face pressure due to ongoing government challenges and global market volatility mainly due to the Trump presidency. Importers begging to take advantage when ZAR is below 18.40 and they are dealing in large tickets.

  • ZAR also benefited for a general weaker $ environment (DXY down 0.71%) and gold hitting all time highs at 2954.84.

The pound was approximately 1.2625, showing resilience despite mixed economic data from the UK. Meanwhile, the euro rate remained stable at about 1.0462, supported by positive economic indicators from the Eurozone (GDP revised higher).

Looking ahead to today, we expect ZAR to retrace back to 18.40 before a further move lower, with market sentiment remaining cautious as investors closely monitor developments in the US economy and SA economic policies. The pound is holding steady at 1.2658, with attention on upcoming UK economic data and potential shifts in the BoE’s monetary policy. The euro is also stable at 1.0490, likely to be influenced by Eurozone economic data and any updates from the ECB.

Against the crosses:

  • GBPZAR trades at 23.2610.
  • EURZAR trades at 19.2759

1.1.2 US

(Feb-13) CPI print yesterday supported FEDs decision to hold rates steady and the general talks between US and Rassia to end the war has boosted risk sentiments.

(Feb-17) We saw a general USD weakness on Friday across the board which was related to various factors and optimism around de-escalating geopolitical risks, this however is still not yet confirmed.

(Feb-19) President Donald Trump announced plans to impose 25% tariffs on automobile, semiconductor, and pharmaceutical imports, with an announcement expected by April 2. He aims to give companies time to establish US-based operations to avoid tariffs. These new levies could significantly impact industries and lead to higher consumer prices, particularly affecting countries like Mexico, South Korea, Malaysia, and Singapore.

1.1.3 SA

(Feb-17) SA’s Finance Minister, Enoch Godongwana, will deliver the 2025 Budget Speech on Wednesday, February 19th. The speech will outline the government’s financial, economic, and social commitments for the year, focusing on balancing economic growth with support for vulnerable communities.

  • Saw the market aggressively rejecting the move lower in ZAR, but the RAND charged ahead to lows of 18.30s.
  • Very little support for Rand below 18.40.

(Feb-19) Budget got postponed to 12th of March.

1.1.3.1 eFX Volumes

  • Overall volumes

(Feb-17) Volumes improved towards the end of the week, with 3 days trading higher that the recent ADV.

(Feb-18) Pull back in volumes due to US holiday on Monday.

(Feb-19) Saw volumes picking to their highs at the back of the postponement of the budget speech.

  • Price to volumes

(Feb-13) Clients ended yesterday being net-short ZAR: - Range for today: 18.60 - 18.30.

(Feb-17) Saw the market reject the move lower in ZAR, with implied topside at 18.65.

(Feb-21) Rand looks set to trade 18.30 with the latest implied support at 18.05 and before that it was 18.25.

  • Liquidity hours across currency pairs
  • Currency positions

(Feb-10) Clients are now net-long USDZAR.

(Feb-11) We see continued net-long positions in ZAR.

(Feb-20) Growing optimism on ZAR, in-fact both importer and exporters happy to trade at these lvls. Both dealing in big tickets.

1.1.3.2 USDZAR levels

(Feb-18) ZAR made the expected correction yesterday to 18.45. Given that we failed to break above 18.50, a move lower but above 18.30 is likely.

(Feb-19) Rand set for a good day today as we see ZAR failing to break above 18.50 in the recent days.

  • We now trade below 18.40, with a general DXY weakness across the board.
  • Gold making some inroads, supportive of the rand.
  • Some risks exist on the budget speech, however, it has not had a historic major FX impact.
  • Geological risks easing.
  • Seeing ZAR at 18.50 - 18.30 for the day, with a potential break lower than 18.30 but above 18.25.

(Feb-20) Some budget highlights [which has now been postponed] included targeting a primary balance surplus to stabilize debt and raising VAT by 2 percentage points to 17%, which was expected to generate R60 billion annually and slightly increase inflation, which in turn, pushes the SARB rate cuts far out. Debt-to-GDP is projected to peak at 76.1% in 2025/26 before moderating to 74.8% by 2027/28.

  • Range for today: 18.60 - 18.30.

(Feb-21) Lasted implied support for zar at 18.05 and before that it was 18.25. The Rand is starting to take advantage of the factor mention (Feb-19) above.

1.1.3.3 USDZAR spreads

(Feb-17) Volumes muted today as its a US holiday.

  • ZAR makes the expected correction to 18.45. Given that we failed to break above 18.50, a move lower but above 18.30 is likely.

(Feb-18) Rand shows zero interest of making moves today, we remain at that rand volume weighted price of 18.40.

(Feb-19) Spread remain wide as a result of the postponement of the Budget to 12-March.

(Feb-20) The ZAR seems to now be benefit fitting from a weaker $ environment which is also coupled with Gold hitting all time highs and the confirmation by the President that there won’t we a fallout in the GNU following the budget issue.

1.1.4 Key events this week:

  • G-20 foreign ministers meet in South Africa, Thursday - Friday
  • Eurozone HCOB manufacturing & services PMI, Friday
  • UK S&P Global manufacturing & services PMI, Friday
  • US S&P Global manufacturing & services PMI, Friday

1.2 FX Volatility Update

1.2.1 Update

By Thuto Mukena - Institutional Sales Specialist (Feb-21)

  • Overview

With the delayed local Budget out of the way, market attention turned back to the U.S., where optimism around a possible U.S.-China trade deal weighed on the dollar across most pairs. The ZAR capitalized on the move, securing third place among the best-performing EM currencies. Meanwhile, President Cyril Ramaphosa addressed the G20 foreign ministers in Johannesburg, calling for leaders to set aside differences and focus on pressing global issues—specifically, geopolitical tensions and climate change. On the vol front, local implied vols adjusted lower across most tenors, reflecting the risk-on momentum that supported ZAR strength. The local unit managed to close off the session firmer at R18.3401/$, with the 1-week USD/ZAR implied vol leading the decline, to close the session at 11.11%, down 0.94 vol pp from the open.

  • G10 & EM

In G10, USD/JPY 1-week implied vol saw the biggest move, jumping 100bps as CPI printed higher than expected, accelerating to 4%—the highest in two years. The yen capitalized on the surprise print, making it the biggest G10 spot gainer on the day. The risk-sensitive AUD/USD 1-week implied vol also bucked the trend, climbing 46bps from the open.

In the high-beta space, most EM currencies benefited from broad USD weakness, leading to an overall decline in 1-week implied vols. However, USD/INR and USD/CNH vols stood out, as markets awaited further confirmation on U.S.-China peace talks and potential tariffs on steel and aluminum imports. 1-week USD/CNH and USD/INR implied vols edged higher by 139bps and 35bps, respectively.

1.3 Africa

1.3.1 Update

By sizwe Mfayela - Institutional Sales Specialist (Feb-21)

  • Angola
    • Angola is conducting a roadshow to gauge investor appetite as it seeks to issue a $2bio Eurobond this year. Angola government officials are currently visiting the Middle East,, the US and Europe to court investors.
  • Botswana
    • The Bank of Botswana left interest rates unchanged at 1.9% as it sees inflation averaging 3.9% in the 2025 fiscal year.
  • Egypt
    • Egypt left its benchmark interest rate unchanged at 27.25% and the lending rate at 28.25%, this being the seventh time in a row rates are left unchanged.
  • Lesotho
    • Jan YoY CPI rose 3.6% vs 3.7% in Dec.
  • Morocco
    • Morocco is looking to raise Euro denominated debt to help fund spending in preparation for co-hosting the 2030 FIFA world cup and for various projects including pension reforms and infrastructure development. The bond sale is expected to raise c.$2bio.
  • Nigeria
    • The Central Bank of Nigeria kept the benchmark interest rate unchanged at 27.5% in efforts to tame sticky inflation and stabilise the Naira. The decision to keep rates unchanged was unanimous amongst all 12 MPC members. - The local currency unit strengthened NGN 20 to close 1480/1495.
  • Uganda
    • Dec YoY trade deficit increased 27% to $330mio from $259.5mio.
  • Eurobonds
    • Cash credit was offered for much of the session yesterday, barring some late ETF buying, but the bid was selective and mainly seen in SOAF and NGERIA.
  • IVYCST
    • After trading well all month, sellers resurfaced yesterday, almost exclusively selling into the short base that has built in the street since about mid-Jan. Strong issuance talk likely led the move to sell.
  • SENEGL
    • Mixed reviews on the investor update call, but the market ripped higher on more short covering as well as some real money buying into the close. The denial of restructuring talk, and mention of adequate near-term funding sources bringing near-term comfort.

1.3.2 Economic data

Economic data releases